UK adults are being urged to spring clean their finances by using smart financial hacks the next time they buy a big ticket item or service.
A new study by Sainsbury’s Bank Credit Cards found nearly a third (32%) of UK adults have bought a lower quality item and then regretted not paying more for a product that would last longer. With two thirds (67%)(1) of people planning to buy a big ticket item in the near future, Sainsbury’s Bank Credit Cards reveals the UK’s ‘False Economies’ the most common ways shoppers are unintentionally spending more money when trying to save on big purchases.
False Economies: Five financial decisions UK adults regret
|False Economies||% of UK adults|
|Buying a lower quality item and later regretting not paying extra for one that would last longer||32%|
|Paying for insurance in monthly instalments rather than paying in a lump sum, despite it being more expensive||29%|
|Buying cheap plane seats but then paying more for allocated seating||15%|
|Spending money on running an old car, when a new car would have been cheaper in the long run||14%|
|Not buying enough baggage allowance for a flight and then paying for additional allowance at the airport||11%|
Make do and mend?
UK adults admit they have often paid for costly repairs to fix old or broken items, spending more money in the long run than if they bought a new item upfront. Nearly one in 10 (9%) people have attempted a DIY project but were unsuccessful and had to pay a tradesperson to finish the job. As a result people on average typically pay for fixing expensive items such as cars and boilers twice, before buying again(1).
Repairs can end up being costly, with an average patch-up job for a car standing at £214 and £150 for a boiler(1). More than a third (37%) of people regretted fixing an item as 44% thought it would be cheaper to fix than buy a new one(1).
Jerome Fernandez, head of credit cards at Sainsbury’s Bank said, “If you are considering significant outlays this year on items that need fixing, it is worthwhile weighing up the initial cost vs any ongoing costs. You could save more money in the long run by investing in a new item upfront.
“A 0% credit card, can enable you to pay an item up without having to find the initial lump sum, just make sure you clear the spend before the offer ends.”
Paying for significant purchases
In a separate study where the Bank asked its customers for their view, 53% said they choose to use credit cards for big purchases. One in three (62%) also revealed that they would consider a new credit card deal that offers a 0% interest period for purchases.
The data also identified that 30% of people are on the hunt for a new credit card in the next 12 months, either with a 0% purchase or balance transfer deal. More than half (54%) of 35 to 44-year olds are looking for a new credit card deal in 2019. The most popular reason for this age group to use credit cards is to purchase items such as cars, furniture or white goods and therefore will want to take advantage of longer 0% deals.
Customers making larger purchases need to make sure they have worked out the monthly repayments to make sure they can afford the regular outgoings, and remain disciplined to ensure they pay off the item within the offer period. If they decide to purchase a car they need to make sure that the car dealership they plan to buy from accepts credit cards.
For those savvy shoppers that are looking to get the most from their next purchase, the Sainsbury’s Bank Dual Offer Credit Card(3) offers 0% interest on balance transfers and purchases for up to 28 months, as well as the opportunity to earn up to 7,500 bonus Nectar points. Get 750 points by spending £35 or more on Sainsbury’s shopping using this card, up to 10 times in the first two months.
Also, you can collect Nectar points wherever you shop. You can earn two Nectar points for every £1 you spend on Sainsbury’s shopping and fuel, and one Nectar point for every £5 spent elsewhere.
Financial expert and editor and founder of Moneymagpie.com, Jasmine Birtles said, “We all do it. We think we’re getting a bargain or being a bit clever with our purchase and then we find that we’ve bought something that was too cheap and it broke. We can’t get it right all the time but if we’re able to take a breath, step back for long enough to think it through (often learning from former mistakes) we can usually work out if it could be better value in the long-run to buy something new.
“If you do end up buying new, usually the cheapest way to do that is with a credit card that offers 0% on purchases as long as you’re absolutely sure you can pay the item up within the offer period.”
Jasmine Birtles reveals her top financial hacks:
- Think about future purchases: Make a list of what big items you may need to buy this year. Are you planning to go on holiday? Do you suspect that your boiler will need to be replaced? Having a future plan for big purchases can help you map out your year’s finances.
- Save money elsewhere: If you’re looking to make a big purchase in one area, can you cut down on costs elsewhere? For example a gym membership could be replaced by joining a free fitness boot camp in your local park.
- Shop around: If you’re planning to spend money on a large purchase, spend a bit of time shopping around so you can get the best deal for your money.
- Factor in the cost of insurance. If you’re going on holiday, don’t forget travel insurance. It doesn’t have to cost a lot but will add to the total price you pay. A new car should come with a warranty but you still have to pay for vehicle insurance and the sportier the model, the more you’re likely to have to add on!
- De-junk your life to bring in the cash. Do you have other items you could sell to bring in the money to pay for this new item? Bring the whole family into it, the kids could sell toys they no longer want and put that towards spending money for the holiday, for example.